Daily Gold Update

Source:Bill Musgrave, American Gold Exchange

AustinGold gained 0.4% to close above $1,710 after the dollar declined on expectations of a smaller rate hike from the Fed, lifting demand for alternative stores of value.

The likelihood of a 1% increase in interest rates at next week’s Fed meeting has fallen substantially, the Wall Street Journal reported today, after surging last week on a hotter-than-expected Consumer Price Index print.

The University of Michigan consumer survey showed 5-year inflation expectations have fallen from 3.1% in June to 2.8% in July, signaling consumers are less becoming less worried about long term inflation. Falling expectations that prices will rise are precisely what the Fed hopes to achieve with rate hikes.

In addition, Fed Governor Christopher Waller and other Fed officials pushed back on market expectations for a 1% hike, saying 75 basis points in July is likely enough. Fed fund futures traders now see just a 30% chance of a 1% rate hike, down from 80% last week.

The dollar fell 0.6% against major rivals on the less-aggressive Fed outlook. A weaker dollar supports gold and other commodities by making them less expensive in other currencies, buoying demand overseas.

The other precious metals were also higher, with silver rising 1.3% while platinum picked up 3% and palladium added 1.1%.

At the Comex close: August gold gained $6.60 to $1,710.20; September silver rose a quarter to $18.84; October platinum climbed $25.10 to $856; and September palladium climbed $19.70 to $1,849.10 an ounce.